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The share market rose for a third day to complete its strongest back-to-back weekly advance since last year’s US presidential election.
A record high for Commonwealth Bank and gains in CSL and supermarkets helped the S&P/ASX 200 crack 7300 for the first time.
The index shook off early weakness to advance 35 points or 0.49 per cent. The rally peaked at 7300.5 late afternoon before a minor retrace to 7295.4.
Today’s advance extended the index’s tally for the week to 116 points or 1.6 per cent. Strong economic data and loose monetary policy have helped the index put on 265 points in the last fortnight, the strongest sustained rise in almost seven months.
What moved the market
The domestic market has outperformed Wall Street over the last month, setting records on three day this week while the major US indices struggled to regain the highs of early May. Bank and mining stocks have tag-teamed the market to blue skies, supported by loose monetary policy, strengthening economic data and commodity prices.
Crucially, the Reserve Bank this week reaffirmed its conviction that this year’s spike in inflation will be temporary, allowing the bank to keep rates low until at least 2024. US stocks sagged overnight as strong economic data prompted questions over how long the Federal Reserve will wait before tightening. The S&P 500 dropped 0.36 per cent and the Nasdaq Composite lost 1.03 per cent.
“A salvo of upbeat economic data has bolstered investors’ expectations that the robust economic readings may rekindle taper talks from the US Federal Reserve. Investors seem to be closely eyeing fresh signals from the central bank to see whether the economic growth will translate into inflation and prompt withdrawal of monetary support,” Kalkine Group CEO Kunal Sawhney said.
US futures traded underwater ahead of tonight’s May employment report. S&P 500 futures were last down five points or 0.11 per cent, but well off their lows.
Bank stocks did the heavy lifting on the ASX today as declines in commodity prices weighed on the big miners. CBA rallied 1.29 per cent to a new peak. Westpac climbed 1.4 per cent to its highest since November 2019. ANZ gained 1.49 per cent. NAB added 1.44 per cent.
Winners’ circle
Exporters and companies that report in US dollars got a lift from a surge in the greenback overnight. The Australian dollar sank more than 1 per cent to its weakest level in almost eight weeks. The Aussie was last off 0.08 per cent at 76.55 US cents.
Winners from the three-week high in the US dollar index included CSL +1.52 per cent, Cochlear +1.94 per cent, ResMed +1.44 per cent and Aristocrat Leisure +0.69 per cent. Computershare added 2.2 per cent, Breville 0.97 per cent and Bluescope Steel 2.98 per cent. Transurban gained 1.35 per cent and Brambles 1.67 per cent.
Telstra claimed a 14-month peak, rising 1.7 per cent. Supermarkets Coles and Woolworths gained 1.67 and 1 per cent, respectively.
Doghouse
A sharp retreat in industrial and precious metals weighed on mining stocks. Copper slumped 3.6 per cent overnight as the US dollar surged. Gold dropped 1.9 per cent. Rio Tinto shed 1.88 per cent, Fortescue Metals 2.01 per cent and BHP 1.69 per cent. Champion Iron shed 2.65 per cent.
In the gold space, Newcrest eased 2.1 per cent, Silver Lake Resources 8.22 per cent and Ramelius 7.69 per cent.
Tech stocks, whose valuations are largely predicated on future earnings, fell with bond markets. Nuix dropped 3.72 per cent, Megaport 1.91 per cent, Xero 1.89 per cent and Afterpay 0.81 per cent.
Appen slid 6.28 per cent after CEO and Managing Director Mark Brayan cashed in almost $1.5 million in shares. The company said Mr Brayan sold 109,430 shares “to satisfy tax obligations”. Mr Brayan retained 482,032 shares in the firm, with another 294,033 performance rights subject to vesting conditions.
Discount retailer The Reject Shop slumped 6.33 per cent to a 12-month low after warning sales remained depressed by border closures, Covid lockdowns and reduced CBD foot traffic as more people worked from home. Trade remained “challenging” and “well below pre COVID-19 levels”.
Other markets
A lacklustre session on Asian markets saw the Asia Dow shed 0.1 per cent, Hong Kong’s Hang Seng 0.28 per cent and Japan’s Nikkei 0.41 per cent. China’s Shanghai Composite rallied 0.36 per cent,
Gold extended a 1.9 overnight decline, falling another $4.30 or 0.23 per cent to US$1,869 an ounce.
Oil resisted last night’s commodity sell-off. Brent crude was last flat at US$71.30 a barrel.
